Since the recession reared its ugly head in 2008, not only have people had to ‘tighten their belts’ when it comes to spending, but lenders have become much more stringent on who they lend money to and what for. 2012 saw a significant turning point in the amount of loans being granted, but what other financial trends did the past twelve months generate?
Mortgage lending
UK Property Market Value in 2012
According to statistics, property in the UK gained £57 billion in value during 2012; an increase which saw the total worth of the market back to levels seen in 2009. This coincided with an increase in mortgage lending as a result of more people moving house.
The Council of Mortgage Lenders (CML) stated that in July 2012 a total of £12.7 billion was paid out to homebuyers, as well as those re-mortgaging their properties. This was a 7% increase from the previous year which saw £11.9 billion paid out in mortgages.
Mortgage Approvals and Lending Competition
With the number of mortgage approvals on the rise, July 2012 saw a price war break out between lenders. Mortgage companies and banks competed to offer the lowest rates on five-year fixed-rate deals there has ever been.
Personal loans
Personal and Payday Loans on the Rise
It wasn’t just an increase in the demand for mortgages that 2012 experienced; those wanting to take personal loans also increased. The conventional route of taking out a bank loan still proved popular but was matched by a significant rise in the number of payday loan borrowers.
These loans received plenty of press and were exposed for being unsuitable for long term debt management or borrowing. Whilst they may be easier to obtain, they can lead to further financial difficulty if used incorrectly – making bank loans the preferred product for those looking for a long-term solution to money matters.
According to the Consumer Credit Counselling Service, 2,000 of their clients had 5 or more payday loans as of October 2012. This compared to just 716 for the whole of 2009. Worse still, of these 2,000 clients, 173 had 10 or more payday loans to pay back which compared to just 42 in 2009.
This startling rise in people resorting to taking out high-interest payday loans reflects the trend that debt was on the rise in 2012.
Spending
How Borrowed Money Was Spent in 2012
With so many people borrowing money in 2012 it is interesting to note where the majority of this money was going.
In October, household spending experienced a 3% month-on-month increase; the largest monthly growth witnessed since May 2009. Numerous reports explained that Brits borrowed cash to fund various things with around 44% of Brits borrowing money from their family to fund Christmas, while 1 in 5 relied on their savings and borrowed cash to afford basic amenities such as food.
Borrowing Responsibly: The Co-operative Bank
The Co-operative Bank loan
To get your finances in order during 2013 it may be necessary to take out a loan. Always borrow from a reputable lender such as the Co-operative Bank and consider all of your options thoroughly.
Their professional staff will talk you through every part of the process and give you the help needed to make the right decision for you and your finances.
Please Note: This is a Sponsored Post
Sources:
http://www.independent.co.uk/property/uk-property-market-increased-57-billion-in-2012-8447481.html ; http://www.guardian.co.uk/money/2012/sep/12/mortgage-lending-rise-council-mortgage-lenders ; http://www.guardian.co.uk/money/2012/oct/17/multiple-payday-loan-borrowers-rise ; http://www.telegraph.co.uk/finance/personalfinance/consumertips/household-bills/9588892/Consumer-spending-increases-by-3pc.html ; http://www.myfamilyhome.co.uk/household-budget/2012/12/11/almost-half-of-brits-forced-to-borrow-money-from-family-for ; http://www.marieclaire.co.uk/news/world/535207/1-in-5-brits-borrow-money-to-pay-for-food.html
